Electric-car maker a good buy for investors?

Tuesday

Jun 29, 2010 at 12:01 AMJun 29, 2010 at 9:36 AM

NEW YORK-- Tesla Motors Inc. begins selling stock to the public today. The sale's success depends on how much investors are willing to bet on a car company that sells a single vehicle, has never made a profit and expects to lose money until at least 2012.

NEW YORK-- Tesla Motors Inc. begins selling stock to the public today. The sale's success depends on how much investors are willing to bet on a car company that sells a single vehicle, has never made a profit and expects to lose money until at least 2012.

Not only that, but the car is electric - technology Americans have shown little interest in - and very pricey.

But the Palo Alto, Calif., startup thinks Americans' taste in cars is changing. Most analysts agree with Tesla that greener forms of powering cars, such as electricity, will gain in the market as gas prices rise.

Tesla has lost $290.2 million since it was founded in 2003 and has never had a profitable quarter. It doesn't expect the red ink to go away until it starts selling its next vehicle, a four-door electric sedan called the Model S, in large numbers. That isn't scheduled "until 2012, or possibly later," according to its business plan filed with the Securities and Exchange Commission.

And the vehicle that is on the market now isn't exactly a hot seller. Since 2008, Tesla has sold only 1,000 models of the two-door Roadster, priced at more than $100,000.

Tesla will be the first automaker to go public since Ford Motor Co. in 1956. It expects the stock sale to raise $226.1million, which will fund the Model S and other corporate activities. Yesterday, the company raised the number of shares it plans to sell from 11.1million to 13.3 million, a sign that investors are upbeat about its prospects.

Tesla Motors said last night that its shares have been priced at $17 each, above an earlier estimate of between $14 and $16.

Its goal is to build 20,000 Model S sedans a year, which are expected to cost about $50,000 after federal tax credits. That puts it on par with other sporty luxury-car brands, such as Porsche.

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